China shares rise as aviation stocks jump, Hong Kong slips again

China shares rose on Friday, buoyed by banks and outperforming aviation counters, while the Hong Kong market slipped again on profit-taking and lackluster earnings.

By midday, the CSI300 of the leading Shanghai and Shenzhen A-share listings added 0.5 percent, while the Shanghai Composite Index edged up 0.3 percent at 2,201.60 points.

However, both indexes were on track for their first weekly loss in seven. For the month, the CSI300 was down 1.2 percent and the Shanghai benchmark flat.

The Hang Seng Index, which has declined the past three days, slipped 0.3 percent to a two-week low at 24,678.14 points. The China Enterprises Index of the top Chinese listings in Hong Kong was off 0.2 percent.

On the month, the Hong Kong indexes are down 0.3 and 2.0 percent, respectively, and August could produce their first monthly loss in four.

The Hang Seng Index is having difficulty in staying above the 25,000-point level, as "we haven't seen any fresh inflows of funds," said Ben Kwong, director at KGI Asia in Hong Kong.

With earnings season coming to an end, "investors' focus will shift back to those economic factors such as whether China will adopt more minor stimulus," he added.

Markets are bracing for China's official manufacturing purchasing managers' index (PMI) due on Monday. A Reuters poll sees it falling to 51.2 in August from July's 51.7, which was the strongest in 27 months.

Chinese banks recovered some recent losses from Thursday. Agricultural Bank of China climbed 0.8 percent after closing at a one-month low the previous session, as did Bank of China.

Aviation companies, part of the defense industries, posted solid gains after a Friday report on the official Shanghai Securities News said reform measures for the defense sector would come out in October.

The same report also said rules on the use and management of low-altitude airspace are expected by the end of the year.

Anton Oilfield, which plunged 14.6 percent on Thursday, slid another 2.9 percent to its lowest since December 2012.

Macau casinos suffered losses, with Galaxy Entertainment Group and Sands China both down more than 2 percent. Barclays on Tuesday revised down earnings forecasts of gambling companies due to concerns about revenue growth.